UN Asia-Pacific Economic Commission Says US-China Deal Unsteady As Trade Curbs Persist

MOSCOW (UrduPoint News / Sputnik - 08th April, 2020) The US-China trade deal, designed to end their trade war, has failed to remove most tariffs and eliminate uncertainty over risks of its collapse, the UN Economic and Social Commission for Asia and the Pacific (ESCAP) said in a report published on Wednesday.

In mid-January, the United States and China struck the Phase One Trade Agreement. Beijing agreed to increase purchases of US goods and services by $200 billion over the next two years. Additionally, China promised to boost copyright protection and expand access to its market.

"The two countries signed an initial trade agreement which could restore trade and business confidence to some extent. However, uncertainties over trade persist. First, the agreement is incomplete. Most of the tariffs imposed remain in place. The agreement did not address the United States' major concerns of systemic issues behind the trade tensions, such as China's subsidies and State-owned enterprises," the report, shared with Sputnik, read.

Both China and the United States may abandon the deal or seek renegotiation as there is no multilateral framework for the enforcement of the agreement, according to the commission.

Additional risks, the report warns, lie in the US decision to expand its protectionist measures on the 5G technology and equipment from China.

"For China, the increasing pressure from the United States could accelerate its pursuit of technological independence, leading to a downward spiral towards breaking technological linkages. If such concerns materialize, they could cause significant disruptions in global value chains, investment flows, cross-border technological cooperation and fragmentation of technology markets. Countries in the region could be forced to take sides," the report added.

In February, the US Federal Reserve similarly expressed concerns in connection with the deal with China, saying that the trade uncertainty "would likely remain elevated, with the possibility remaining of the emergence of new tensions as well as the re-escalation of existing tensions."